Earlier this month, state legislators adopted a budget that will strike a fatal blow to the historically troubled MTA. The budget authorizes the agency to increase its debt limit to a whopping $55 billion from an already unsustainable $37 billion.
The MTA is the fifth-largest government debtor in the nation, after only the states of California, Massachusetts and New York and the City of New York, with an estimated $36.5 billion in outstanding debt.The number is staggering, unconscionable and shocking but even more so when you consider that lawmakers have now allowed this single state authority to issue more debt than the entire State of New York’s bond cap – $47 billion – provides.
This is $10 billion more than a decade ago, when adjusted for inflation. Over the same period, the authority’s operating costs have increased 50 percent and unaffordable capital plans have been approved as if the 12 counties of the MTA service territory make up some sort of imaginary utopia where money grows on trees.
Mismanaged projects abound, like the Long Island Rail Road East Side Access, which is $6 billion overrun and 10 years overschedule, while it is estimated that another $6 billion will be needed to construct Phase 2 of the Second Avenue Subway, 10 years and $4.45 billion after construction of Phase 1 began.
The appetite for costly megaprojects hasn’t shown any signs of waning. Governor Cuomo now has his sights on connecting LaGuardia Airport to the 7 line and building a third track for the Long Island Rail Road. These ideas of grand design are not bad ones, but will come with a steadily increasing price tag.
And, we must remember that, in order to maintain and upgrade the buses, subways, railways, bridges and tunnels the MTA already has, it must spend an estimated $29 billion every five years.
So where will the money come from?
For years, New York’s straphangers have continued to shell out more money for less service. Commuters have seen tolls on MTA crossings rise to among the highest in the nation.
We’re realizing an unintended consequence in the willingness of the MTA and its enablers in Albany to continue feeding the beast with unsavory debt. Instead of controlling spending and using some of the state’s surplus and bank settlement funds to begin paying down the debt, Governor Cuomo is kicking the “mortgage can” down the road to the grandchildren and great-grandchildren of today’s straphangers.
History and basic economic theory teach us that sustained economic growth is not perpetual, and with this most recent increase, the MTA has become a runaway train.
To add insult to injury, every time the MTA issues a bond, it is forced to pay a bond fee to the State of New York, costing the agency millions. The annual compounding of these costs puts more pressure on tolls and fares. These fees have amounted to over $100 million since 2006.
Meanwhile, the City of New York has put its profound lack of wisdom on full display by proposing to decriminalize fare-beating. The MTA loses a reported $95 million each year through theft of service. If fare-beaters know they can get away with it, that number will rise.
Talk about making a bad problem worse.
The only thing that would make this mess worse is if Albany’s latest move caused the MTA’s debt rating to be downgraded, resulting in higher interest charges.
It is inevitable that the can of debt will now be kicked so far down the road that it will never come back. We will see the current trend of robbing Peter to pay Paul continue as the MTA uses more of its operating funds to make debt service payments. The current costs to use MTA services is just a drop in the bucket compared to what fares and tolls will be in the future, and we’ll have Governor Cuomo and the state legislature to thank.
Assemblymember Nicole Malliotakis represents the 64th A.D.